By Kathleen Wells, Wells Family Law
What is a Cost Award?
When a court action reaches its end, the judge will generally make a statement about costs, their amount, and which party has to pay them. Basically, a costs award is given to the party that won the lawsuit to help them recoup some of the money that they spent bringing their action.
The rationale behind a costs award is simple. If you start a lawsuit, and you win, essentially that means that the court considers that you were in the right. Given that you were right, you never should have had to go through the stress, time, and expense of going to court: the other party should compensate you for this. A costs award is an attempt to help make up for some of this hardship. However, it is important to note that a costs award will not usually compensate you for all of your legal fees.
Party-Party Costs
The most common type of costs are called “party-party” costs. Party-party costs awards are based on a tariff, set out in the Alberta Rules of Court [1] at Schedule C. Schedule C is set up like a table. Across the top are dollar amounts, based on the amount of damages awarded by the court. Down the left hand side of the table are all of the procedural steps that could be taken over the course of a lawsuit.
When a lawsuit is won, and damages are awarded, the judge will usually state which column costs will be awarded from [2]. Your lawyer will then prepare a document called a “Bill of Costs.” The Bill of Costs will list each step taken in the lawsuit that corresponds with the steps listed on the left side of Schedule C. By going down the column that the judge named, your lawyer will assign the appropriate dollar value to the procedural step that is listed in the Bill of Costs. Once all of these amounts are totalled, your lawyer will send the Bill of Costs to the lawyer for the other party. The losing party is required to pay your Bill of Costs, along with any other judgment amounts issued by the court.
For example, assume that you were awarded a judgment of $75,000 and the court ordered party-party costs. As per Schedule C, your costs would be awarded pursuant to Column 2. If your lawyer took the procedural steps of filing pleadings, exchanging Affidavits of Records, one full day of Questioning, preparing for trial, and one full day of trial, the total amount of your Bill of Costs would be $10,150. The losing party would be required to pay this amount, in addition to the $75,000 damage award.
Costs awards are discretionary: the court always has the authority to order costs, refuse to order costs, or deviate from the columns in Schedule C. Costs awards are not automatically awarded, nor are they always party-party costs pursuant to Schedule C. Schedule C states that unless the court orders otherwise, divorces and matters which have no monetary amounts attached to them will be dealt with under Column 1. If an application is of mixed success to both parties, the court may decide that no costs should be awarded.
“Costs in the Cause” vs. “Cost in Any Event of the Cause”
Occasionally, in the event of an application that takes place prior to a trial, the court will state that costs are to be “in the cause.” “Costs in the cause” means that the costs of the application, which is an item that will be eventually listed on one party’s Bill of Costs, are to be included on the winning party’s Bill of Costs. The reverse of this is referred to as “costs in any event of the cause.” “Costs in any event of the cause” means that the judge has decided that whichever party was successful in the application should get the cost associated with the application (pursuant to Schedule C) paid to them by the other party immediately: the successful party does not have to wait for the final outcome of the trial.
Costs in the Provincial Court
For actions that take place in Provincial Court, costs are awarded differently. The Provincial Court has jurisdiction to award amounts of up to $50,000. The Rules of Court provide that if the amount awarded is up to, or less than, this amount, costs will be awarded at no more than 75 percent of the amount specified under Column 1 [3]. If the amount of your judgment was $35,000, your costs would be awarded pursuant to Column 1. If the total amount of the Bill of Costs was $6,000, you would only be entitled to a costs award of $4,500.
“Solicitor-Client Costs” vs. “Solicitor and Own Client Costs”
There are special circumstances where the court will consider it appropriate to completely deviate from Schedule C and award a party the full value of their legal costs. These costs awards are called “solicitor-client costs” and “solicitor and own client costs”; both are meant to punish the losing party. “Solicitor-client costs” allow the winning party to collect all of the reasonable costs of the lawsuit paid at the lawyer’s hourly rate. However, if the arrangement with the lawyer is based on a contingency fee agreement, solicitor-client costs will not include the contingency fee. “Solicitor and own client costs” provide the winning party with full indemnity for their costs in running the lawsuit: the losing party must fully reimburse the winning party with 100 percent of their reasonable and proper legal expenses, including any contingency fees. It is important to note that solicitor-client costs and solicitor and own client costs are very rarely awarded; party-party costs based on Schedule C are far more common.
If you have questions about court costs and how they are awarded, please contact Wells Family Lawfor a free consultation – we are Calgary-based divorce lawyers who are committed to a fast and effective resolution.
[1] Alberta Rules of Court, AR 124/2010.
[2] In the event that the type of costs that are awarded are party-party costs.
[3] Alberta Rules of Court, supra, at Rule 10.42.